Stupid doggedness in Gage case endangers pursuit of larger quarry

Now look at the fine mess they've gotten themselves into.

The government managed to look like checkers players at a chess match this week in its foundering case against personal injury attorney Noel Gage. Instead of stepping back after limping away with a hung jury in its first trial, the U.S. attorney's office continued to pursue Gage in a mission that provides a distraction from the larger, more important targets in the FBI's doctor-lawyer medical malpractice investigation.

On Monday, Senior U.S. District Judge Justin Quackenbush ordered the government to provide limited immunity to Dr. Mark Kabins to compel his testimony in a second trial against Gage, who is accused of conspiring with medical consultant Howard Awand and others to exploit clients, inflate medical costs and protect selected physicians from malpractice lawsuits.

A failure to grant Kabins immunity could result in the charges being dismissed against Gage, and on Tuesday the government refused to immunize the doctor.

Kabins was one of the treating surgeons in a malpractice case filed by Melodie Simon, who was represented by Gage. The government contends Gage, Kabins, surgeon John Thalgott and Awand conspired to exploit Simon by diverting the lawsuit away from the doctors in exchange for future favors. Simon won $2.3 million for injuries that left her paralyzed and received $1.3 million after attorney fees and costs. At trial, the government outlined another case in which Gage won an $18 million settlement. A jury didn't buy it.

In a motion to the court, Gage's attorneys argued that the government's key witnesses, surgeons Thalgott and Benjamin Venger, were granted immunity in exchange for their testimony. Kabins, who shared an office with Thalgott and was integrally involved in the Simon case, also deserved that opportunity even though he was expected to contradict Thalgott's version of events.

Quackenbush agreed.

Unless there's a startling new development, the government's case against Gage appears sunk. That should surprise no one.

The signs of trouble were there from the start. Quackenbush was skeptical of the case against Gage as early as the pretrial stage. Instead of paring the 19 charges against Gage, the government soldiered on and watched the judge do the cutting for them. Some people would consider that a wake-up call.

After seeing 13 charges dismissed and watching its star witnesses look arrogant and sleazy, the damage was done. Jurors split 8-to-4 to convict. A mistrial was declared.

A lot of prosecutors would have wisely seen that split as a sign to pick up and move on to more important business or arrange for a settlement that allowed everyone to save face, but that didn't happen.

What was the prosecution's response to those very real problems?

To encourage its own middleman, attorney George Kelesis, who helped arrange for the testimony of Thalgott and Venger, to approach pet reporter pals and pound away at the Review-Journal for printing the obvious. It was real amateur-hour stuff.

At the risk of playing amateur psychiatrist, this case reeks of big egos on both sides of the aisle. Gage, whose close relationship with reputed case-fixer Awand is no secret, ought to have been amenable to settlement. Hung jury or not, he'll have trouble shaking the stench of suspicion he sold out a defenseless client.

The prosecution, meanwhile, shouldn't have focused on the gnarled veteran litigator as its test case. Is Gage really an integral part of a larger conspiracy?

Going forward, the government will have to work harder to prepare Thalgott and Venger. While accusing Gage of criminal conspiracies, Venger admitted perjury and money laundering. He also received immunity and agreed to forfeit money to the government.

While damning Gage, Thalgott admitted he participated in meetings outlined in the criminal conspiracy. Although the jury didn't hear it, Thalgott agreed to pay Simon an additional $1.5 million.

In an ill-advised April 3 letter to his "dear and valued patients," Thalgott attempted to revise the facts and place the blame on the mean old newspaper. He decided to leave out of the letter his immunity deal and the $1.5 million check he agreed to hand Simon. Add one more amateur-hour move to the growing list.

By failing to gauge their case against Gage, prosecutors now risk harming their larger investigation and the case against the real linchpin in this affair, Howard Awand.

It's a fine mess, indeed.

John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call (702) 383-0295.